Confessions of A Corporate Headhunter

Executive recruiters need some lessons in basic client service
Apr 01, 2005

It is likely that, because of writing this article, I will be drummed out of the inner sanctum of retained search laureates (a.k.a. corporate headhunters). Yet I have to reveal what my conscience—and my business sense—knows is best for the industry. Besides, as a female founder of my own firm, I probably never would have gotten into that inner sanctum, anyway.

After 30 years in the business, I have come to realize that my profession is broken. Few in our service sector will admit it; we have image, revenue, and our very existence to protect. But clients have recognized that the system we have co-conspired to create is one of the least client-focused service industries in the global for-profit community.

To begin with, the established payment structure for a search firm's services makes no sense. It is industry dogma that a client will pay one-third of the fee upon contract execution, one-third 30 days later, and the final third 30 days after the second payment, whether or not the job has been completed. That's like going to the tailor, paying for a suit, and then leaving with nothing but an empty suit bag. No wonder we "headhunters" are branded with so many unsavory names. This model has always struck me as unfair, which is why my firm offers performance-driven retained searches. But for performance standards and metrics—payments should be tied to performance milestones—to have any fundamental impact, clients must demand that the performance-driven model be instituted as an industry-wide practice.

No search firm—neither the large, multi-office global nor the boutique player—has all the answers or can do it all 100 percent of the time. Although my firm has been successful 95 percent of the time, there is still the five percent of needed improvement that keeps me up at night.

Several of the big search firms are publicly traded, which means that they focus on stockholders, not the stakeholders, or clients. These firms try not to air their own internal laundry, but what lies beneath the mystique of a global brand is more often than not an internal fight for both candidate and client control.

As my father taught me, "A deal is never a good deal unless all parties are bettered by it once they leave the table." Clients deserve to have 100 percent of their retained searches filled, as long as everyone has agreed upfront that the searches are fillable. But to achieve that goal, the retained search industry will have to change the way it approaches client service, from focusing on one deal only to focusing on what's best for the long-term relationship with the client.

As an old-fashioned girl and business founder, I believe that human foible makes it inevitable that even the most well-intended search firms can run dry on an assignment from time to time, with possibly dire consequences for the client. Particularly in the pharma industry, losing months without pivotal hires can translate into a loss of time to market and revenue—and, even more importantly, to the loss of human lives and quality of life. When a search firm that has given its all still turns up empty-handed, the client company is left with a dear price to pay, and the whole situation is lose-lose. Even if the client seeks out a new firm, they end up paying two fees—one to the original firm that failed and one to the new firm—for just one hire.

This happens largely because all retained search firms have committed to "hands-off" provisions dictating that they cannot poach talent from certain competitors of that client. The bottom line is that it's unethical to steal people out of the company that entrusts a firm with their retained searches, as well as sensitive information about their own organization. It's easy to see how limiting this can be for a client.

But what if a firm were to partner with another firm to guarantee that the entire market is covered? Some strategic companies have done this, but the client still ended up paying two fees. Would you be happy paying twice for the same item? I don't think your stockholders would, either.

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